Connected TV, multi-screen, 'super-platform' - Strategy Analytics' 2012 predictions

After a successful set of predictions made a year ago, Strategy Analytics’ Digital Consumer team once again presents its thoughts on the likely highlights of the coming 12 months. Here are the twelve predictions and key questions to watch for in 2012.

1. Apple iTV: Will They, Won’t They?

People have been predicting the arrival of an Apple TV for as long as anyone can remember, so if we wait long enough the prediction will surely come true. Will that day happen by 31st December, 2012? We’ve been sceptical in the past but logic suggests the moment of truth gets nearer with every passing year. Judging by the swirling Apple rumour mill the pieces at least appear to be falling into place: cloud, displays, content negotiations. Let’s see how that last piece works out before counting too many turkeys.

As we reported recently Apple already has 32% of the market for Connected TV Players, those plug-in gadgets which bring web TV services and content to your ageing LCD or plasma. So it might seem a minor step for Apple to take the plunge into launching a fully integrated Apple TV device. Laptop, Smartphone, Tablet ... TV. It all seems so logical, but Strategy Analytics has always argued that TV is different for two critical reasons: User Interface (multi- versus single user, input selection control), and Content (premium content rights, revenue share). Has Apple really solved those challenges, as Steve Jobs would have us believe? 2012 may bring us closer to the answer, and then again...

Key Questions for 2012

- Can Apple solve the TV UI challenge?

- Will premium TV rights owners see value in working with Apple?


2. Smart TV OSs: Watch Out For That Blind Side

Apple versus Google is the obvious big boys’ battleground in smart TV, notwithstanding the fact that neither of these ecosystem players has yet penetrated more than a fraction of a percentage point of a TV market which is dominated by proprietary platforms. But there’s one other OS player that seems to get left out of these discussions, in spite of the fact that it has sold more OSs than any other software company on the planet. Microsoft’s digital home strategy may have circled through numerous iterations over the years, but one way or another the company has found itself with one of the leading connected TV platforms in the form of its Xbox360 “games” console.

Microsoft certainly cannot afford to let its rivals carve up the emerging smart TV market, and however much it evolves its console strategy it needs to do something about the TV itself. We suspect there may be a few surprises in the pipeline. Porting some of the Xbox experience to a TV may be the obvious step but don’t forget that other parts of the Microsoft organisation may also have a say. Windows Phone is set to become one of the fastest growing smartphone platforms in 2012, and if the slickness of that system can one day be transferred to the big screen Microsoft may really be on to a winner.

Key Questions for 2012

- Will Microsoft continue to focus solely on the Xbox for its TV strategy?

- Is there room for a third smart TV “mega-platform” alongside Apple and Google?


3. Three C’s: Content, Clouds and Connectable Devices Combine to Create the Super Platform

Take sophisticated online content services such as iTunes, Amazon Prime Instant Video, Sony Entertainment Network or Google Music. Add connectable devices such as the iPhone, Nexus Prime, PS Vita or Kindle Fire. Sprinkle on some cloud-based digital content lockers which store an individual’s content, both purchased and owned, and is happy to redistribute these as required. From this heady mix we get large-scale, proprietary content taxonomies forged from the symbiotic relationship of digital media, digital distribution services, connectable devices and storage which we call the “super-platform.” And these data centre driven behemoths will be coming your way in 2012.

Strategy Analytics’ Digital Media Strategies team has prioritised analysis of these strange and wonderful creatures which will impact every facet of audience consumption, will diminish the role of the device, marginalise standalone content providers and raise the barriers to entry to historically unimaginable levels. Now it is no longer enough to ‘just’ be a multibillion dollar market leader to play this game: bring an addressable market of a few hundred million devices, global territorial coverage, tier one content relationships across all entertainment formats and tens of billions of dollars to invest over the next decade, or go home.

Key questions for 2012

- Are internet connections and data limits up to the job?

- How will network service providers respond to the data delivery challenge?


4. Second Screen Apps to Benefit Most From Creatives, Not Technologists in 2012

Currently second screen apps are uninspiring and functional at best. They focus on improving the EPG, aggregating social tools available elsewhere and check-in services the majority of people outside the analyst, technology and marketing industries couldn’t care less about (cf. QR codes). But what SHOULD distinguish the second screen experience is live broadcast. Currently there is nowhere near the level of smart, creative interactivity and integration with live broadcast content which is needed to drive adoption. If second screen apps promise little more than programme oriented social networking, trivia, polls, check-in badges and the “Clap” and “Boo” buttons in MIG’s wildly successful X-Factor App, I will delete the lot by 2013.

What we need is creative input from the gifted individuals who make the Downton Abbeys and Black Mirrors of broadcast TV and the technologists behind the apps I have spoken to admit as much. It is time for the coders and engineers to step aside and let the creators evolve the second screen experience so that it is worthy of being considered a crucial part of what got the audience to check out their apps in the first place: the show on the first screen.

Key questions for 2012

- Is television’s creative community ready to accept the second screen challenge?

- Do broadcasters have it in their DNA to communicate with their multiscreen audience?


5. Fiber and Cable Drive Broadband Speeds to New Highs

Average global household broadband speeds will increase by 60% in 2012, from 14.8Mbps in 2011 to 24Mbps by the end of 2012. This will be driven largely by an increased take up of higher speed Service Provider offerings, including Fiber and Cable, as well as an increase in “mobile broadband substitution,” whereby users depend on wireless or mobile connections (including 3G or 4G) as their only means of accessing the internet. Asia Pacific will see the most aggressive growth in 2012, where the average household speed will nearly double to 32 Mbps.

Key Questions for 212

- Will Service Providers succeed in monetizing incremental bandwidth offerings?

- To what extent will Service Provider-imposed data caps affect mobile broadband substitution?


6. Google will re-launch Android@Home

There are several events and trends leading to an expectation for the next generation implementation of Android@Home. Most obvious is the fact that smartphones are connecting people to friends, family, bank accounts, restaurants and much more, so why not to their homes? Google acquired Motorola Mobility, which previously bought 4Home and its software, which enables users to monitor and control devices remotely and is the platform Verizon built its Home Monitoring and Control service. In the energy management realm in the US, there is a White House initiative pushing utilities to provide customer usage data in standardized, machine readable format called the “Green Button.” Clever apps written for Android systems (and many others) can easily exceed the capabilities of the now defunct Google PowerMeter.

Finally, there are numerous advertising and lead generation possibilities for Android@Home that can feed directly into Google’s primary business.

Key Questions for 2012

- Will Google offer Android@Home to consumers directly or as a platform for service providers to enhance the value of their pipes?

- What will be the successful business models emerging from such an offering and which companies (besides Google) stand to benefit?


7. Tablets in 12: A Tale of Two A’s

Amazon’s arrival on the tablet scene has already had a major impact on the competitive landscape. While early reports of product design flaws are widespread, we expect Amazon to tackle these over the coming months through a combination of software upgrades and new hardware configurations: in particular we expect Amazon to launch an improved and larger, 10” Fire during 2012.

Apple, the tablet market leader, will not sit back while Amazon takes all the limelight and, in spite of previous pronouncements about the viability of sub-10” displays, we expect Apple to move into the compact market with a tablet in the 7-8” bracket. What we can’t predict for 2012 is that Android will become the leading tablet OS: that landmark will be reached in 2013, according to our latest tablet OS forecast.

Key Questions for 2012

- How much investment is Amazon prepared to make to fund its tablet strategy?

- Can Apple maintain its user experience leadership as Android and Windows device development continues to accelerate?


8. Repeat After Me: “Take Me To My Show”

Voice-controlled technology has always featured prominently in future home visions. Microsoft has brought these into the mainstream over the past couple of years via its Xbox360 console, and 2012 will see a great deal more activity in voice controlled TV. In spite of this example, many voice-controlled technologies over the years have failed to reach expectations and there are genuine doubts over its widespread acceptance, even when the technology works effectively.

Voice control has already emerged with varying degrees of success within the mobile space as well as the automotive sector. Our own usability studies carried out over the past 12 months within both of these sectors have highlighted the divide that currently exists between singular voice enabled features and a fully functional interface which supports the user in all of their potential actions. In order to maximise interface usability, many lessons should be drawn upon from other sectors which have been refining such systems throughout 2011. While Apple is the most anticipated of these forthcoming systems, other TV manufacturers including Samsung Electronics and LG are also expected to announce voice-enabled features.

Key Questions for 2012

- Can major TV vendors finally crack the TV voice control challenge?

- Will the systems overcome consumer concerns about accuracy?


9. New wireless home technologies go mainstream: Z-Wave, Zigbee provide foundation for future smart home services

Best Buy introduced an Insignia TV in 2011 with an integrated Z-Wave remote control. ZigBee RF4CE technology is being integrated into advanced remote controls by MSOs and other service providers.

Initially these RF controllers expand the possibilities of entertainment system control, but longer term these technologies can provide the infrastructure for home monitoring and control, access control and security, energy management and home health care applications. Expect to see more announcements of entertainment systems which can be connected to non-entertainment smart home control systems.

Key Questions for 2012

- Will we see major brands featuring home control interfaces along with Internet connectivity and a wide array of input ports on their entertainment systems?

- What business models can SPs develop based on these monitoring and control capabilities?


10. Xbox 720 and PS4 will be announced

There are already rumors that some chipset companies have already started working with Microsoft and Sony to design their next generation games consoles. As Nintendo is set to announce more details about its Wii U console at next year’s E3, Microsoft and Sony are very likely to respond by announcing their next generation consoles, or at least prototypes. But games console competition has expanded beyond the hardware to online platforms and services. The new games consoles will be more like a hardware upgrade as Xbox Live and PlayStation Network will certainly keep their consistency. We do not expect the new generation consoles from Microsoft and Sony to be available in the market until 2013.

Key Questions for 2012

- Will Wii U sales fall short of expectations due to competition from tablets and cloud gaming services?

- How do Microsoft and Sony present and introduce new platforms without affecting return on current generation investments?


11. Multiscreen Olympics Batter the Web

As a UK-based analyst it would be remiss of me not to mention the London Olympics in the context of 2012 predictions. Putting the Games online is nothing new, but the scale of the operation this year will dwarf anything seen before. Critically, analysis of our connected devices forecast published in July shows that there will be nearly eight times as many connected video devices in use worldwide during the 2012 games as four years earlier: 1.4 billion in July 2012, compared to less than 200 million in 2008. Whether it’s a smartphone, a tablet or a connected TV, viewers around the world, wherever they are, will be offered web-delivered live and catch-up access to a multitude of sporting events during July and August.

BT, Ericsson, Cisco and other delivery partners assure us that “the internet will cope”. Time will tell, but next summer’s Games will certainly provide another critical lesson on the long road towards all-IP video and television delivery.

Key Questions for 2012

- Will smartphone, tablet and connected TV users get good online video experiences of the Games?

- Will networks be able to support the video consumption needs of millions of Games visitors?


12. Statistical Milestones for 2012

From Strategy Analytics’ global forecasting models, we have selected the following nuggets to watch out for in 2012:

- The global installed base of connected/smart TVs will grow by 68% to reach 200 million

- Global sales of tablets will reach 94 million units, a 41% increase on 2011

- Social networks will generate global revenues of more than $7bn through advertising, virtual items and premium services

- Nearly 100 million homes worldwide will use wireless/mobile as their only broadband access service

- 2012 will be the first year online gaming revenue outstrips packaged games, generating 45% of global revenue against 43% for packaged


Contact Information
To explore these topics in more detail or to hear how our solutions (Workshops, Presentations, Consulting engagements, annual multi-client services) can support you please contact us www.strategyanalytics.com/solutions.html

The author of this Insight, David Mercer, can be reached at dmercer@strategyanalytics.com
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